LONDON, June 6 (Reuters) – UK traders backed cash market funds in Might on the quickest price because the nation’s failed ‘mini-budget’ final yr, choosing warning after a unstable interval in international banking, funds community Calastone stated on Tuesday.
Calastone’s fund stream index confirmed internet inflows to cash market funds of 419 million kilos ($521 million) throughout the month – the best since October 2022, quickly after then prime minister Liz Truss’ authorities laid out short-lived financial plans.
The information additionally confirmed that environmental, social and company governance-focused fairness funds suffered their worst month on file, shedding 304 million kilos of capital. Might was solely the second month to see internet promoting on this space in additional than 5 years, Calastone stated.
As savers have sought higher returns on their money and diminished danger after a sequence of financial institution failures, cash market funds globally have seen enormous inflows – notably within the U.S.
“Cash market funds spend money on bonds with very brief maturities, so they’re sometimes among the many least dangerous belongings accessible,” Edward Glyn, head of worldwide markets at Calastone, stated.
“Wobbles within the US banking system have reminded traders of the dangers of getting financial institution deposits above insured thresholds too, leaving cash markets as an apparent place for wealthier people to park surplus money.”
UK traders continued to spend money on bond markets, albeit at a slower price as volatility dampened demand. Traders added a internet 318 million kilos throughout the month, half the common of the final yr, Calastone stated.
Fairness funds suffered internet outflows of 302 million kilos, in the meantime, marking a pointy reversal after robust inflows in March and April. UK-focused funds have been notably arduous hit, seeing outflows of 583 million kilos.
($1 = 0.8045 kilos)
(This story has been refiled so as to add a dropped letter in paragraph 2)
Reporting by Iain Withers; modifying by Barbara Lewis
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